HOW IS THE STIMULUS MONEY BEING SPENT? QUICKLY AND GOING, GOING...GONE!!!!



Stimulus: How Fast We're Spending Nearly $800 Billion
by Christopher Flavelle and Jeff Larson, ProPublica

The success of the federal stimulus program may hinge on the speed with which the government is able to distribute the billions authorized by Congress. Unlike some other estimates of the cost of the stimulus, which are based on spending projections, we took our numbers from the actual budget authority issued by Congress — $792 billion and change. We'll be tracking the progress of stimulus payments made by federal agencies weekly.
Agency Spent (Thousands) In Process (Thousands) Left to Spend (Thousands) Total (Thousands) Spent (%) Progress
Railroad Retirement Board $140,773 $59 $15,568 $156,400 90.01%
Social Security Administration $13,266,217 $13,766 $1,947,017 $15,227,000 87.12%
Department of Labor $30,806,605 $24,277,856 $15,493,539 $70,578,000 43.65%
Veterans Affairs $502,071 $409,956 $488,973 $1,401,000 35.84%
Department of Justice $1,253,176 $2,717,235 $31,589 $4,002,000 31.31%
Health and Human Services $34,965,330 $20,663,733 $67,163,937 $122,793,000 28.48%
Department of Education $22,611,465 $45,015,964 $30,610,571 $98,238,000 23.02%
National Endowment for the Arts $10,771 $38,984 $244 $50,000 21.54%
Department of Agriculture $5,585,294 $1,919,204 $20,076,502 $27,581,000 20.25%
Small Business Administration $117,661 $261,027 $351,312 $730,000 16.12%
Housing and Urban Development $1,721,104 $9,642,123 $2,311,773 $13,675,000 12.59%
Corporation for National and Community Service $23,993 $132,566 $44,441 $201,000 11.94%
US Agency for International Development $4,052 $16,007 $17,940 $38,000 10.66%
Department of Transportation $4,490,494 $25,474,967 $18,154,539 $48,120,000 9.33%
Smithsonian $2,168 $19,459 $3,373 $25,000 8.67%
Army Corps of Engineers $391,846 $1,929,392 $2,278,762 $4,600,000 8.52%
Department of Commerce $591,574 $758,397 $6,566,028 $7,916,000 7.47%
General Services Administration $305,067 $1,515,861 $4,036,072 $5,857,000 5.21%
Department of the Interior $152,366 $758,395 $2,094,239 $3,005,000 5.07%
Department of Homeland Security $123,839 $1,271,773 $1,359,389 $2,755,000 4.50%
Department of State $26,353 $118,311 $457,335 $602,000 4.38%
NASA $37,836 $428,112 $536,052 $1,002,000 3.78%
Environmental Protection Agency $267,872 $6,870,556 $81,573 $7,220,000 3.71%
Department of Defense $267,562 $3,101,137 $4,066,301 $7,435,000 3.60%
Department of Energy $1,130,780 $17,229,697 $26,864,523 $45,225,000 2.50%
Department of the Treasury $1,243,994 $2,597,750 $85,371,256 $89,213,000 1.39%
National Science Foundation $30,941 $2,370,703 $600,356 $3,002,000 1.03%
TOTALS $120,071,204 $169,552,990 $291,023,204 $580,647,400 20.68%

This chart and other stories are part of Eye on the Stimulus, our blog dedicated to tracking the stimulus from bill to building.

ANOTHER $14 BILLION GIVEAWAY (TO RETIRED PEOPLE THIS TIME) COURTESY OF TAXPAYERS-SO WHAT ELSE IS NEW, IT'S ONLY MONEY!



A Drop in the Wrong Bucket
by David Leonhardt provided by
The New York Times

If you wanted to help the economy and you had $14 billion to bestow on any group of people, which group would you choose:

a) Teenagers and young adults, who have an 18 percent unemployment rate.

b) All the middle-age long-term jobless who, for various reasons, are not eligible for unemployment benefits.

c) The taxpayers of the future (by using the $14 billion to pay down the deficit).

d) The group that has survived the Great Recession probably better than any other, with stronger income growth, fewer job cuts and little loss of health insurance.

The Obama administration has chosen option d) -- people in their 60's and beyond.

The president has proposed sending a $250 check to every Social Security recipient, which sounds pretty good at first. The checks would be part of his admirable efforts to stimulate the economy, and older Americans are clearly a sympathetic group. Next year, they are scheduled to receive no cost-of-living increase in their Social Security benefits.

Yet that is largely because they received an artificially high 5.8 percent increase this year. For this reason and others, economists are generally recoiling at the proposal.

President Obama's own economic advisers raised objections, as my colleague Jackie Calmes has reported. Isabel Sawhill of the Brookings Institution told me she thought the idea was crazy -- and then noted she was in her 70s. Rosanne Altshuler, co-director of the Tax Policy Center in Washington, says that the checks "seem to be pure pandering to seniors."

Indeed, the politics are attractive. People over 65 vote in large numbers. Saying no to them is never easy.

And therein lies a problem that's much larger than one misguided $14 billion proposal.

With the economy gradually improving, members of Congress and White House officials are just starting to think more seriously about the budget deficit. Fifty-three senators voted down a narrow health care bill last week, with many citing its potential impact on the budget. On Monday, Christina Romer, the chairwoman of Mr. Obama's Council of Economic Advisers, gave a speech in which she said the deficit was "simply not a problem that can be kicked down the road indefinitely."

Just about everybody agrees that solving the deficit depends on reducing the benefits that current law has promised to retirees, via Medicare and Social Security. That's not how people usually put it, of course. They tend to use the more soothing phrase "entitlement reform." But entitlement reform is just another way of saying that we can't pay more in benefits than we collect in taxes.

"If the long-term issue is entitlement reform," says Joel Slemrod, a University of Michigan economist, "the fact that the political system cannot say no to $250 checks to elderly people is a bad sign."

The first Social Security check was mailed in 1940 to Ida May Fuller, a retired legal secretary in Ludlow, Vt. It was for $22.54. Every month for the next 10 years, Ms. Fuller received a check for that same amount. The original Social Security legislation had not included an inflation adjustment, which meant benefits did not keep up with the cost of living. A decade later, Ms. Fuller's checks were worth about 40 percent less in real terms than when she started receiving them.

Congress finally increased benefits in 1950 and then continued to do so in fits and starts, sometimes faster than inflation, sometimes slower and usually in an election year. President Richard M. Nixon and a Democratic Congress brought some order to this process in 1972, by automatically tying benefits to the movement of an inflation index in the previous year.

The changes were part of the transformation, during the middle decades of the 20th century, in how this country treated the elderly. In the 1930s, they had little safety net and frequently struggled to meet their basic needs. Four decades later, they were the only group of Americans with guaranteed health care and a guaranteed income. All in all, it was certainly for the good.

But by the 1970s, you could start to see the early signs of excess. In their bill, Mr. Nixon and Congress included a little bonus: the increase in Social Security payments could never be less than 3 percent, no matter what inflation was. In the 1980s, Congress reduced the floor to zero -- meaning that benefits would be held constant if prices fell -- but the principle remained the same: heads, it's a tie; tails, Social Security recipients win.

This year, the coin finally came up tails.

With oil prices plunging and other prices falling, last year's high inflation (which led to the 5.8 percent increase in Social Security payments) has turned into deflation. Overall prices have dropped 2.1 percent in the last year, according to the relevant price index.

Social Security payments, however, will remain as they were, which means that recipients are already set to receive an effective raise, even without Mr. Obama's $250 checks. No matter what happens with that proposal, 2010 will be the first year since at least the Nixon era that the buying power of an individual worker's Social Security goes up.

Compare that to what's happening with minimum-wage workers in Colorado. Their wage is also tied to inflation, but it has no floor. So it will fall slightly next year, to keep pace with prices.

Now, I understand that there are arguments on the other side of the issue. Lawrence Summers, Mr. Obama's top economics aide, pointed out that the stimulus bill included one-time $250 payments for Social Security recipients, which were sent out this year, but tax cuts for workers both this year and next year. "We're correcting an anomaly," he told me.

Others will argue that the elderly simply need help. Some have been the victim of age discrimination. Too many still live in poverty. All of them are likely to see their Medicare premiums rise in 2010. This recession has spared no group.

But older Americans really have survived the recession better than most.

Many of them started buying assets years if not decades ago, meaning they were not the main victims of the stock and housing bubbles. They had a cushion. In addition, relatively few of them work in manufacturing or construction, the hardest-hit industries.

Just consider: The real median income of over-65 households rose 3 percent from 2000 to 2008. For households headed by somebody age 25 to 44, it fell about 7 percent.

Economic policy, like most everything else, is about making choices. Mr. Obama is choosing the elderly, rich and poor, to be more worthy of $14 billion in government checks than struggling workers or schoolchildren. Republicans have pandered in their own ways, choosing to oppose just about any cut in Medicare and, in effect, to stick your grandchildren with an enormous tax bill.

In a way, I understand where the politicians are coming from. We voters may say that we are in favor of cutting the deficit, but usually mean it in only the theoretical sense. Who wants their own benefits cut? For that matter, who is even willing to have their Social Security checks hold steady?

CONSUMER CONFIDENVCE INDEX; MUST YOU REALLY ASK? IT IS PREDICTABLY IN THE TOILET



Americans' confidence about the U.S. economy fell unexpectedly in October as job prospects remained bleak, a private research group said Tuesday, fueling speculation that an already gloomy holiday shopping forecast could worsen.

The Consumer Confidence Index, released by The Conference Board, sank unexpectedly to 47.7 in October -- its second-lowest reading since May.

Forecasters predicted a higher reading of 53.1.

A reading above 90 means the economy is on solid footing. Above 100 signals strong growth.

The index has seesawed since reaching a historic low of 25.3 in February and climbed to 53.4 in September.

Economists watch consumer confidence because spending on goods and services by Americans accounts for about 70 percent of U.S. economic activity by federal measures. While the reading doesn't always predict short-term spending, it's a helpful barometer of spending levels over time, especially for expensive, big-ticket items.

Recent economic data, from housing to manufacturing, has offered mixed signals but some evidence that an economic recovery might be slow.

But on Tuesday, the figures showed that shoppers have a grim outlook for the future, The Conference Board said, expecting a worsening business climate, fewer jobs and lower salaries. That's particularly bad news for retailers who depend on the holiday shopping season for a hefty share of their annual revenue.

"Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays," said Lynn Franco, director of The Conference Board's Consumer Research Center.

Economists expect holiday sales to be at best flat from a year ago, which saw the biggest declines since at least 1967 when the Commerce Department started collecting the data.

The Consumer Confidence Index survey, which was sent to 5,000 households, had a cutoff date of Oct. 21.

The news came on the heels of rosier data about the nation's housing market.

The Standard & Poor's/Case-Shiller home price index, which studies real estate transactions in 20 major cities, showed home prices rose in August, the third straight monthly increase and a sign that a housing recovery might be taking hold.

The measure showed the home price index climbed 1 percent from July to a seasonally adjusted reading of 144.5. While prices are down 11.4 percent from August a year ago, the annual declines have slowed since February.

Prices are at levels not seen since August 2003 and have fallen almost 30 percent from the peak in May 2006.

The latest index shows a widespread turnaround with prices rising month-over-month in 15 metro areas since June.

How long will prices climb as there is a lack of financing for the homes?

How will consumers have confidence when their neighbors are not working?

SUCKER RALLY OR REAL GOOD NEWS RALLY? WHERE IS THE GOOD NEWS THAT CAN SUSTAIN OR CONTINUE THE RALLY?



Jeremy Grantham: Sucker's Rally Almost Over

Jeremy Grantham of Boston-based GMO called the crash. He also called the rally. He also called a whole bunch of stuff before that--although, as he is the first to admit, like other value folks, he does have the habit of being early.

Not this time, though.

Within days of the March low, Jeremy published "Reinvesting While Terrified," in which he observed that it was time to bet the farm. He soon called for a stimulus-fueled rally that would take the S&P 500 to 1000-1100, which is where we are now. He also laid out his expectation that the market would then move sideways for 7 years.

Well, we've hit the high of Jeremy's sucker's rally prediction. Stocks are now once again significantly overvalued (Jeremy puts the overvaluation at 25%, with fair value on the S&P 500 at 860). He thinks the market can go a bit higher but that it will break down next year. He's looking for a "painful" pullback of at least 20%. A new low is not likely, but not out of the question.

The idea behind my forecast six months ago was that
regardless of the fundamentals, there would be a sharp
rally [to S&P 1000-1100]. After a very large decline and a period of somewhat
blind panic, it is simply the nature of the beast. Exhibit 1
shows my favorite example of a last hurrah after the first
leg of the 1929 crash.

After the sharp decline in the fall of 1929, the S&P 500
rallied 46% from its low in November to the rally high of
April 12, 1930. It then, of course, fell by over 80%. But
on April 12 it was once again overpriced; it was down
only 18% from its peak and was back to the level of June
1929. But what a difference there was in the outlook
between June 1929 and April 1930! In June, the economic
outlook was a candidate for the brightest in history with
effectively no unemployment, 5% productivity, and
over 16% year-over-year gain in industrial output. By
April 1930, unemployment had doubled and industrial
production had dropped from +16% to -9% in 5 months,
which may be the world record in economic deterioration.
Worse, in 1930 there was no extra liquidity fl owing
around and absolutely no moral hazard. “Liquidate the
labor, liquidate the stocks, liquidate the farmers”2 was
their version. Yet the market rose 46%.

How could it do this in the face of a world going to hell?
My theory is that the market always displayed a belief
in a type of primitive market efficiency decades before
the academics took it up. It is a belief that if the market
once sold much higher, it must mean something. And
in the case of 1930, hadn’t Irving Fisher, arguably the
greatest American economist of the century, said that
the 1929 highs were completely justifi ed and that it was
the decline that was hysterical pessimism?

Hadn’t E.L. Smith also explained in his Common Stocks as Long Term Investments (1924) – a startling precursor to Jeremy Siegel’s dangerous book Stocks for the Long Run (1994) – that stocks would always beat bonds by divine right? And there is always someone of the “Dow 36,000” persuasion to reinforce our need to believe that as markets decline, higher prices in previous peaks must surely have meant
something, and not merely have been unjustified bubbly bursts of enthusiasm and momentum.

Today there has been so much more varied encouragement for a rally than existed in 1930. The higher prices preceding this crash (that were far above both trend and fair value) had lasted for many years; from 1996 through 2001 and from 2003 through mid-2008. This time, we also saw history’s greatest stimulus program, desperate bailouts, and clear promises of years of low rates. As mentioned six months ago, in the third year of the Presidential Cycle, a tiny fraction of the current level of moral hazard and easy money has done its typically great job of driving equity markets and speculation higher.

In total, therefore, it should be no surprise to historians that this rally has handsomely beaten 46%, and would probably have done so whether the actual economic recovery was deemed a pleasant surprise or not. Looking at previous “last hurrahs,” it should also have been expected that any rally this time would be tilted toward risk-taking and, the more stimulus and moral hazard, the bigger the tilt. I must say, though, that I never expected such an extreme tilt to risk-taking: it’s practically a cliff! Never mess with the Fed, I guess. Although, looking at the record, these dramatic short-term resuscitations do seem to breed severe problems down the road. So, probably, we will continue to live in exciting times, which is not all bad in
our business.

Economic and Financial
Fundamentals and the Stock
Market Outlook

The good news is that we have not fallen off into another
Great Depression. With the degree of stimulus there
seemed little chance of that, and we have consistently
expected a global economic recovery by late this year
or early next year. The operating ratio for industrial
production reached its lowest level in decades. It should
bounce back and, if it moves up from 68 to 80 over three
to fi ve years, will provide a good kicker to that part of
the economy. Inventories, I believe, will also recover. In
short, the normal tendency of an economy to recover is
nearly irresistible and needs coordinated incompetence to
offset it – like the 1930 Smoot-Hawley Tariff Act, which
helped to precipitate a global trade war. But this does not
mean that everything is fi ne longer term. It still seems a
safe bet that seven lean years await us.

Corporate ex-financials profit margins remain above
average and, if I am right about the coming seven lean
years, we will soon enough look back nostalgically at
such high profits.

Price/earnings ratios, adjusted for even
normal margins, are also significantly above fair value
after the rally. Fair value on the S&P is now about 860
(fair value has declined steadily as the accounting smoke clears from the wreckage and there are still, perhaps, some smoldering embers). This places today’s market (October
19) at almost 25% overpriced, and on a seven-year horizon
would move our normal forecast of 5.7% real down by
more than 3% a year.

Doesn’t it seem odd that we would be measurably overpriced once again, given that we face a seven-year future that almost everyone agrees will be
tougher than normal? Major imbalances are unlikely to
be quick or easy to work through. For example, we must
eventually consume less, pay down debt, and realign our
lives to being less capital-rich. Global trade imbalances
must also readjust...

We believed from the start that this market rally and
any out-performance of risk would have very little to do
with any dividend discount model concept of value, so
it is pointless to “ooh and ah” too much at how far and
how fast it has traveled. The lessons, if any, are that low
rates and generous liquidity are, if anything, a little more
powerful than we thought, which is a high hurdle because
we have respected their power for years. And what we
thought were powerful and painful investment lessons
on the dangers of taking risk too casually turned out to
be less memorable than we expected. Risk-taking has
come roaring back. Value, it must be admitted, is seldom
a powerful force in the short term. The Fed’s weapons
of low rates, plenty of money, and the promise of future
help if necessary seem stronger than value over a few
quarters. And the forces of herding and momentum are
also helping to push prices up, with the market apparently
quite unrepentant of recent crimes and willing to be silly
once again. We said in July that we would sit and wait
for the market to be silly again. This has been a very
quick response although, as real silliness goes, I suppose
it is not really trying yet. In soccer terminology, for
the last six months it is Voting Machine 10, Weighing
Machine nil!

Price, however, does matter eventually, and what will
stop this market (my blind guess is in the first few months
of next year) is a combination of two factors.

First, the disappointing economic and financial data that will begin
to show the intractably long-term nature of some of our
problems, particularly pressure on profit margins as the
quick fix of short-term labor cuts fades away. Second,
the slow gravitational pull of value as U.S. stocks reach
+30-35% overpricing in the face of an extended difficult
environment.

On a longer horizon of 2 to 10 years, I believe that
resource limitations will also have a negative effect (see
2Q 2009 Quarterly Letter). I argued that increasingly
scarce resources will give us tougher times but that we
are collectively in denial. The response to this startling
revelation, for the fi rst time since I started writing, was
nil. It disappeared into an absolutely black hole. No one
even bothered to say it was idiotic, which they quite often
do. Given my thesis of a world in denial, though, I must
say it’s a delicious irony.

So, back to timing. It is hard for me to see what will stop the
charge to risk-taking this year. With the near universality
of the feeling of being left behind in reinvesting, it is
nerve-wracking for us prudent investors to contemplate
the odds of the market rushing past my earlier prediction
of 1100. It can certainly happen.

Conversely, I have some modest hopes for a collective
sensible resistance to the current Fed plot to have us all
borrow and speculate again. I would still guess (a well-
informed guess, I hope) that before next year is out, the
market will drop painfully from current levels. “Painfully”
is arbitrarily deemed by me to start at -15%. My guess,
though, is that the U.S. market will drop below fair value,
which is a 22% decline (from the S&P 500 level of 1098
on October 19).

Unlike the really tough bears, though, I see no need for a
new low. I think the history books will be happy enough
with the 666 of last February. Of course, they would
probably be slightly happier with, say, 550. The point
is that this is not a situation like 2005, 2006, and 2007
when for the fi rst time a great bubble – 2000 – had not yet
broken back through its trend. I described that reversal
as a near certainty. I love historical consistency, and with
32 bubbles completely broken, the single one outstanding
– the S&P 500 – was a source of nagging pain. But that
was all comfortably resolved by a substantial new low for
the S&P 500 last year. This cycle, in contrast, has already
established a perfectly respectable S&P low at 666, well
below trend, and can officially please itself from here. A
new low (or not) will look compatible with history, which
makes the prediction business less easy.

ANOTHER GOVERNMENT INDUCED "PROBLEM" BLAMED ON BUSINESSES AGAIN: COMPENSATION INCENTIVES FORCED BY GOVERMENT, NOW DERIDED



You may all remember that back in the 90's, the big government lawmakers made it non-deductible for businesses to claim more than $1 million in salaries as a tax deduction.

The legislators sold this idea as one that was correct; give the incentive pay in stock.

Their thinking was that this would stop the big pay packages for executives. The executives then received and liked getting stock incentives instead. As businesses improved their profitability, they got more and more in stock values instead, like it should be.

The government said that this was the proper way to pay incentives.

Now the stock paid incentives that kicked in at various targeted big businesses, like AIG, Merrill, etc., are the new target of the government which set this program up in the first place.

Will the hypocrisy never end?

HOUSING RECOVERY, HOUSING IMPROVEMENT;THE MYTH VERSUS THE REALITY-THINGS WILL GET WORSE BEFORE THEY GET BETTER


There's been a lot of talk lately about a recovery in the housing market – even reports of bubbles re-inflating in certain markets.

Elizabeth Warren, chair of the Congressional Oversight Panel, isn't buying it.

"We see things getting worse in the housing market," Warren says, citing the pernicious effects of foreclosures, which rose 5% in the third quarter to a total of 937,840, according to RealtyTrac.

"The long-term impact of high foreclosure rates on our housing market and overall economy would be disastrous," Warren warns, citing estimates that 10 to 12 million U.S. homes could ultimately go into foreclosure. "We have to get foreclosures under control."

Why the sense of urgency? A single foreclosure property brings prices down an average of $5000 for every house in a two-block radius and costs investors an average of $120,000, she says.

In its most recent report, Warren's panel criticized the Treasury's foreclosure modification efforts as "inadequate" and "targeted at the housing crisis as it existed six months ago, rather than as it exits right now."

Specifically, the Treasury program is targeted at subprime borrowers hit with ballooning mortgage payments vs. prime borrowers hit by job losses. As for the "morality question" of whether the government should be bailing out homeowners, Warren says "I'm passed that," noting "there's plenty of unfairness to go around."

More importantly, "ultimately the American taxpayer -- thanks to Fannie, Freddie and FHA -- is going to stand behind many of these mortgage," she says. "We need to be thinking more globally what is cheapest possible way to bring this crisis to an end."

One solution: Force investors holders these mortgages who may be betting on a government bailout to take a haircut, as occurred with GM and Chrysler creditors.

"That's why they call it investing," Warren says. "You make profits in good times, take losses in bad times. That's the fundamental part of this [modification effort] that's missing."

Mortgages will get harder to obtain if the mortgage investors lose their government backing.

There are lower comps, lower apraisals, more forclosures, higher unemployment, higher gas prices, lower FICO scores, lower rents... sure housing is recovering... ...and Goldman sucks rakes in record profits. the disconnect between wall street and main street widens.

"One solution: Force investors holders these mortgages who may be betting on a government bailout to take a haircut" ------ Got any more solutions? Problem with this solution is that it's like trying to make a single strand of straw from a bale of hay. Who knows who the ultimate investors are? How will you get them all to agree? I suppose if it were considered to be an "involuntary conversion" it may possibly work. All solutions end with a lot of pain for someone (investors), and doing nothing ends in a lot of pain (in theory, homeowners). Either way, it's going to hurt. Meh, I think we're heading for some serious deflation. It looks like it may be inflation because of all the printing, but what would happen today if every loan on everyone's books were written off? That's extreme, but write-off's are happening in many areas of business. When that happens, people get laid off because there isn't that expected source of cash flow (debt repayment). Ugh, not pretty.
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JustinT
JustinT -

The American taxpayer has once again fallen for the catatonic tonic known as the stock market - Keep Your Eye On The DOW ------- Meanwhile, BIG Banks with their taxpayer-supported bail-outs and mega-volume computerized stock trading are once again sucking the last remaining wealth and life blood from John Q. Public, Joseph/ine Six-Pack, et.al. ------- BUT, nevermind that rubish, keep your eye on the DOW! ... you may someday know a BIG banker who can buy you a beer, or tip you for shining their shoes. Complicity is KING, and will save your soul!!! ------- BIG banks WIN, American TAXPAYER LOSES! ------- Yep, America taxpayer snoozes and loses
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RivrB
RivrB -

Those clowns on campidiot.com were right! Hyperdeflation is coming! 5 years from now nobody will be able to afford a $500 starter home!
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marx
marx -

Why buy a house when I can buy gold and an RV


It's simple. We can all take a page from the banksters accounting book. We can stop the Mark to Market value of our homes, just like Washington allowed their bankster buddies to do with their trillions of dollars crap assets.
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JARAA
JARAA -

wait a minute... why do we have to be thinking "globally"? that's how we lost the American jobs to outsourcing in the first place. forget about the international community and globalism... put America first for a change.
Mark
Mark -

Why all this focus on keeping house prices artificially high? This just makes it overly expensive for first-time home buyers. Houses had typically been about 2.5x income, and a return to that level should bring long-term stability to the market. All this governmemt (taxpayer) debt being added on to keep the market inflated is plain stupid for more reasons than I can list.
if they can turn a bad bank to a good bank .and turn a good bank to a bad bank .just think what they CAN /HAVE done to MORTGAGE LENDERS ..LITERALLY GET THEM TO CHANGE ALL THE MORTGAGE RULES FOR A SHORT SIGHTED "POLITICAL AGENDA "FOR THE PAST 20 YEARS AT LEAST.... try this BITE OFF MORE THAN YOU CAN CHEW....TILL YOU CHOKE...and hope barney and the crowd knows the Heimlich maneuver.,,you know what i mean .A KICK IN THE CHEST..


Why doesn't the Fed just change the term of Investor to Government Contractor? Just cause you invest in something doesn't mean your guaranteed to make money on the deal!
san -

What they did in the UK in the 1990s they doubled the term of your loan and if you were unemployed the government paid the interest on the loan because it was cheaper than kicking you out into rented property.

Warren your right, nothing is fair in all of this mess. The Rich will continue to be bailed out at the Taxpayers expense, and they will get Richer no matter what. When the dust settles the middle class will be no more. When all that is left is the haves and have-nots then the shooting and bloodshed will begin.

You can't artifically support asset prices Liz! She is just another bailout shill - smoother, more polished than the rest of the shills.

Interesting talk as other headlines are stating that there is a recovery.

NEWEST $8.5 BILLION MILLION BOONDOGGLE-GOVERNMENT INEPTNESS IN PROCESSING HOME-BUYER TAX CREDITS


IRS doled out $620 million to ineligible filers: Auditor
Agency paid home-buyer tax credit to taxpayers as young as 4, report says

Congress mulls whether to extend the popular first-time home-buyer tax credit aimed at shoring up the decimated U.S. housing market, government auditors said Thursday that thousands of ineligible taxpayers have received millions of dollars under the program.

About 19,350 taxpayers claimed $139 million worth of tax credits for homes they had not yet purchased, and about 70,000 taxpayers claimed more than $479 million in credits despite evidence they were not first-time home buyers, according to a report by the Treasury Inspector General for Tax Administration, the agency that monitors the Internal Revenue Service.
Curbing bank pay

Amid public outcry over compensation paid to bank chiefs, the Federal Reserve and U.S. Treasury have unveiled new rules for executive pay. WSJ's Matthew Rose says the move is an historic government intervention in the private sector.

Almost 600 people who claimed about $4 million worth of the credit were not yet 18 years old -- and the youngest taxpayer was 4 years old, the report said.

The tax credit, worth up to $8,000, expires on Nov. 30, though some lawmakers have proposed extending it, and some have said it should be extended and expanded to people beyond just first-time buyers.

Meanwhile, another 48,450 taxpayers who claimed the credit didn't get their full due, likely because they weren't aware they were eligible for up to $8,000 under the revised credit in the American Recovery and Reinvestment Act, versus the $7,500 maximum credit available originally, TIGTA said.

"Based on the administration of the credit to date, I am concerned about the IRS's ability to effectively administer the credits claimed within the original deadline, let alone within an extended deadline for certain taxpayers," said J. Russell George, Treasury Inspector General for Tax Administration, in testimony Thursday to a House Ways and Means subcommittee hearing looking at administration of the tax credit. Read his testimony (PDF).

The TIGTA report pointed to about 90,000 erroneous claims totaling about $622 million. Through Oct. 9, the IRS has processed more than 1.2 million tax returns claiming almost $8.5 billion worth of the credit, according to the report.

Still, some of the erroneous taxpayers' claims may turn out to be correct, George said. For instance, the credit rules prohibit owning a home in the previous three years -- but that means a principal residence. The TIGTA report did not assess whether the evidence of taxpayers' previous home-ownership on earlier tax returns was related to a principal residence or not.

And, the TIGTA report said, the IRS recently put in place strategies to prevent such problems happening in the future. Still, the past problems have yet to be resolved in some cases. For instance, while the law prohibits taxpayers from receiving the credit before they've bought a house, thousands of taxpayers did so before the IRS put controls in place, according to TIGTA.

"Many taxpayers will be identified by recently implemented IRS filters and subject to pre-refund audits; however, TIGTA identified 70,005 taxpayers whose tax returns were processed prior to the implementation of these filters," the report said.

ARE THEY SUPPOSED TO FIRST HAVE THE FILTERS, FIRST?

CZARS, CZARS EVERYWHERE IN THE USA; PAY CZARS, CAR CZARS, BANK CZARS-DO WE REALLY NEED CZARS COMING BACK NOW??




Are Czars the new bosses in America? has there been a comeback of the Romanov family relatives to beat us into submission in all industries and businesses?

If you remember your world history, the Czar (and his family) was killed (actually spelled TSAR) by the Communists Bolsheviks, who then got rid of the power of the Czars. But in America, they are back-back with absolute power over all businesses and industries that have received the government (our) funds. They want to rule with great power and have the final and only say in all businesses.

Has anyone looked into the history books? The 300 year rule in Russia by the Czars was a time of famine, poverty and lack of goods.

Is this where we are going?

Why is our government not embarrassed at even these titles?

Nix the Czars, bring back the FREE market.

Last year, the image of chief executives of three U.S. automakers boarding private luxury jets to travel to Washington, D.C., to ask lawmakers for bailout funds touched off a firestorm among the public and politicians. This was seen as a symbol of corporate excess and arrogance, the pay and perks enjoyed by top executives were panned by politicians. And now the administration is taking aim.

The Obama administration's pay czar, Kenneth Feinberg, is set to announce that seven companies receiving "exceptional" amounts of taxpayer aid will slash the annual salaries of their 25 top executives by an average of 90 percent from 2008 levels, sources told ABC News.

Feinberg will release his determinations on executive compensation today, the Treasury Department said.

Overall, the total compensation for these 25 executives, including yearly bonuses and retirement pay, will be cut by an average of around 50 percent. Additionally, any of the 175 executives who want more than $25,000 in special perks -- such as private planes, limos, company cars or country club memberships -- will have to receive government permission first.

Combined, the executives have received almost $300 billion taxpayer dollars, more than the gross domestic product of South Africa or Portugal.

Feinberg, who was appointed at the Treasury to manage compensation issues for companies receiving federal bailout money, acknowledged that the move won't exactly make him the most popular man on Wall Street.

"I've learned about the incredible gap, the chasm between Wall Street perceptions and Main Street perceptions," Feinberg said Tuesday at a Washington, D.C., conference held by the National Association of Corporate Directors. "It is a formidable chasm that I'm not sure can be bridged, although the law requires me to attempt to bridge that gap."

"When I issue these packages, I suspect I'll move to Pluto, which will be too close to Earth," he joked.

Americans are likely to approve of the new rules. An ABC News/Washington Post poll showed that 71 percent of Americans supported such a move ( of course they are happy to see that others get their pay cut).

Even some conservatives, including Sen. Richard Shelby, R-Ala., who opposed the stimulus and bailout, say Feinberg is being a good steward of tax dollars.

"If these people run the companies well they should be rewarded but at the same time we shouldn't forget about who put the money in there," Shelby told ABC News. "It's not private capital, it's the U.S. taxpayers' money." Senator, how about NO MONEY from taxpayers in the first place.

Any businessperson knows that to keep traders at these banks and other highly compensated people who work on commissions, they will be moving on to other banks.

But there are critics who say the government shouldn't determine corporate salaries, even if those firms are taking taxpayer dollars.

"If you wind up having second-rate people in your companies because you can't pay them enough, that is presumably going to hurt the rest of us because our economy won't be as dynamic," said Dan Mitchell, a senior fellow at the libertarian think tank the Cato Institute. Finally a smart quote.

Feinberg was appointed by the administration in June to oversee executive pay at seven companies receiving what the administration has deemed "exceptional assistance" from the government bailout -- AIG, Citigroup, Bank of America, General Motors, Chrysler, GMAC and Chrysler Financial.

On Wednesday, White House Press Secretary praised Feinberg for "doing what the president put him in place to do."

AIG, which has received government approval for a record $180 billion in taxpayer aid, will reduce compensation for its top 25 executives to less than $200,000 total, a source told ABC News. Executives in the company's financial products unit -- which brought the insurance giant to its knees with risky deals -- will not receive any other compensation in the form of stocks or stock options, the source added.

Earlier this year, the insurance giant created a public uproar when it dished out $165 million in retention payments. In March 2010, the company was set to pay out another $198 million, which Feinberg asked them to scale back, according to a recent report by government watchdog Neil Barofsky.

The administration has been vocal in its displeasure with Wall Street pay, especially after bailout recipient Goldman Sachs said it was set to pay a record $23 billion in bonuses this year.

"The bonuses are offensive, and to the firms that still have federal TARP money, there's some jurisdiction: The pay master of Treasury is working on trying to limit that," David Axelrod, senior adviser to President Obama, said Sunday on "This Week with George Stephanopoulos." "You've seen a lot of firms go to stock rather than cash -- so at least people have a stake in the success of their company, and they're not just walking away with cash-making short-term decisions.

"They ought to think through what they are doing, and they ought to understand that a year ago a lot of these institutions were teetering on the brink and the United States government and taxpayers came to their defense," Axelrod said. "They have responsibilities and they ought to meet those responsibilities."

In a rebuke to the industry on Wall Street last month, Obama on Sept. 14 vowed, "We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses."

News of Feinberg's work to reduce compensation already has emerged in recent weeks. His work with Citigroup led the bank to sell its Phibro division, run by Andrew Hall, a trader who raked in a $100 million bonus this year. This bonus was for the PROFITS he made for the bank which without him would not be there!

"Citigroup made a determination in its wisdom," Feinberg said Tuesday when asked about the bank's move. "All I can say is the result speaks for itself."

Meanwhile, outgoing Bank of America CEO Ken Lewis, following conversations with Feinberg, agreed to receive no salary or other pay for 2009.

"I would have been surprised if it had led to anything else in light of the unique -- or not so unique -- facts of that individual case," Feinberg said.

However, Lewis will still receive a sizable retirement package, reportedly upwards of $50 million. Bob Stickler of Bank of America was among the officials at the bailed out companies who declined to react today to the news of Feinberg's plans -- though as with officials at Chrysler Group and GMAC, he acknowledged Bank of America had been talking to Obama officials about executive pay.

"We have no comment at this time as we have not been officially notified," Stickler said. "We have been in talks about our top earners for several months."

Upon his appointment in early June, Feinberg told ABC News in an interview, "My goal is to reach out to these seven companies and meet with them and work out an acceptable compensation program -- acceptable to the business community, acceptable to the administration and hopefully acceptable to Congress and the public. It's a challenge, but I think it's do-able.

"Historically, the American people frown on the notion of government insinuating itself into the private marketplace," Feinberg said. "My answer to those critics is I understand that concern, I share that concern and the question is: How do you strike a balance between that legitimate concern and the populist outrage at prior industry compensation practices?"

In the coming weeks, the Federal Reserve also is expected to issue new guidelines on executive compensation.

Is the Czar going to tell all public companies next what they should pay their management.....what happened to FREE markets?

THE INVEVITABLE DECLINE OF THE DOLLAR AS A WORLD RESERVE CURRENCY; THE POUND WAS THAT PREVIOUSLY, NOTHING LASTS FOREVER-SPREAD THE RISK NOW!



The weakening dollar is dying a slow death.

"It's clear where we're headed," says Niall Ferguson, author of The Ascent of Money. "Ten years from now there will be more than one international reserve currency," he tells Tech Ticker.

Ferguson dismisses the dollar loyalists, citing the British pound –the last international reserve currency - as his example. "These things don't last forever" but don't expect it to happen overnight. "It's a long multi-decade process," he states. Even with the dollar near a 14-month low against the Euro, he claims it's not without historical precedence for the greenback to lose "another 20%" this year.

For international investors the lose is enough to offset this year's stock market gains. Not exactly, great motivation for foreigners to keep buying the almighty dollar.

The best way to prepare for this event is to have a diversified portfolio of assets including a basket of other strong currencies as a hedge such as the euro, for instance of hold assets such as real estate in other countries.

recently it has been reported that there is such a shortage of houses for sale in London, that realtors have NO INVENTORY to sell! House prices are at an all time high!

But then again, if you have no ability to leverage a purchase in the USA housing market, it may be tougher to leverage a foreign purchase.

CANADIAN DOLLAR (THE LOONIE) IS GETTING CLOSE TO TRADING AT PAR WITH THE USA DOLLAR...USA WEAKNESS IS GOOD FOR CANADA!



Don't you hate seeing that small print on book and magazines that says one amount as the USA price and a larger amount in Canada. I have had a store often try to charge the Canadian price for a book or magazine.

The Canadian dollar rallied for a third straight week, touching a 14-month high and moving closer to parity with its U.S. counterpart as signs of economic recovery pushed commodities and stocks higher.

Canada’s currency gained as crude oil, the nation’s largest export, surged 10 percent and the Dow Jones Industrial Average surpassed 10,000 for the first time in a year. The Bank of Canada will keep interest rates at a record low level when it meets on Oct. 20, according to all 23 economists in a Bloomberg News survey.

“As long as equities continue to go up, it will be positive for the Canadian dollar,” said Maria Jones, a currency trader in Toronto at TD Securities Inc., a unit of Canada’s second-biggest bank. Stocks will continue to rally as long as “we are seeing moderate growth in the U.S.” and the Federal Reserve holds interest rates near zero.

The Canadian currency, nicknamed the loonie for the aquatic bird on the C$1 coin, appreciated 0.5 percent to C$1.0370 per U.S. dollar yesterday in Toronto, from C$1.0422 on Oct. 9. One Canadian dollar buys 96.44 U.S. cents. The currency climbed to $1.0207 on Oct. 15, the strongest level since July 29, 2008. The loonie and the U.S. dollar last traded on a one-for-one basis on July 22, 2008.

Employment in Canada rose last month six times more than forecast, unexpectedly reducing the jobless rate to 8.4 percent, the government said on Oct. 9. Service industries in the U.S., the nation’s biggest trade partner, expanded in September for the first time in a year, an Institute for Supply Management index showed on Oct. 5. U.S. retail sales excluding automobiles climbed 0.5 percent last month, more than forecast, the Commerce Department said on Oct. 14.

The probability that the Canadian currency will trade at C$1 per U.S. dollar at year-end is 60 percent, according to implied volatility from options trading monitored by Bloomberg. The chance of parity in one month is 42 percent, trading shows.

The Canadian currency pared its advance yesterday, depreciating 0.3 percent, after Statistics Canada said the consumer price index declined in September for a fourth month, the longest stretch since 1953. The report spurred speculation that subdued inflation will allow the Bank of Canada to leave borrowing costs unchanged next week.

The annual inflation rate excluding gasoline and seven other volatile items -- the so-called core rate the central bank uses to discern future price trends -- slowed to 1.5 percent, from 1.6 percent in August.

The inflation data “will go a long way to allay fears of an early hike by the BOC,” David Watt, senior currency strategist in Toronto at RBC Capital Markets, wrote in a note yesterday. The firm is a unit of Canada’s biggest bank.

Central bank policy makers restated at their last meeting in September a pledge to keep the benchmark overnight interest rate unchanged through June 2010 unless the outlook for inflation changes. The rate has been at a record low 0.25 percent since April. It was 4.5 percent when the bank began lowering it in December 2007.

Canadian Prime Minister Stephen Harper said yesterday in remarks to reporters in Toronto that he shares Bank of Canada Governor Mark Carney’s concern that gains in the country’s currency could slow recovery. Carney said in a speech on June 4 that a persistently strong Canadian dollar would “work against” positive factors such as improved trade.

“The big speculation is that they might increase their rhetoric in regards to the currency,” TD’s Jones said. “They can talk, but the question for the markets is, are they going to act? If you don’t think they are going to act, then the talk really doesn’t mean anything.”

The Standard & Poor’s 500 Index gained 1.5 percent this week as JPMorgan Chase & Co. and Intel Corp. posted better-than- expected earnings. So far, 80 percent of companies in the index surpassed third-quarter earnings estimates.

Should companies continue to surprise investors on earnings, “it will be good for equities and put ongoing downward pressure on the U.S. dollar,” wrote Camilla Sutton and Sacha Tihanyi, currency strategists at Scotia Capital Inc. in Toronto, in a note yesterday. The firm is a unit of Canada’s third-largest bank.

The Reuters/Jeffries CRB Index, a gauge of 19 raw materials and commodities, rallied 5.2 percent, the biggest weekly gain since May. Canada generates more than half of its export revenue from raw materials, including oil. Crude oil for November delivery touched $78.75 a barrel on the New York Mercantile Exchange yesterday, the highest level in a year.

Oh, Canada!

RECORD FORECLOSURES SHOW GOVERNMENT PROGRAMS ARE JUST A LOT OF TALK..IS THAT NEWS TO ANYBODY?



"Worst three months of all time" for foreclosures, blare the headlines....what happened to saving all those homes advertised by the government during one of its numerous bailouts? I guess the bailouts are not for homeowners.

Despite signs of broader economic recovery, number of foreclosure filings hit a record high in the third quarter - a sign the plague is still spreading.

The number of homes receiving foreclosure filings is skyrocketing across the country. Despite concerted government-led and lender-supported efforts to prevent foreclosures, the number of filings hit a record high in the third quarter, according to a report issued Thursday.

"They were the worst three months of all time," said Rick Sharga, spokesman for RealtyTrac, an online marketer of foreclosed homes.

During that time, 937,840 homes received a foreclosure letter -- whether a default notice, auction notice or bank repossession, the RealtyTrac report said. That means one in every 136 U.S. homes were in foreclosure, which is a 5% increase from the second quarter and a 23% jump over the third quarter of 2008.

Nevada continued to be the worst-hit state with one filing for every 23 households. But even tranquil Vermont, where the foreclosure crisis has barely brushed the housing market, saw foreclosure filings jump nearly 170% compared with the third quarter of 2008. Still, that resulted in just one filing for every 5,023 households in the state -- the best record in the country.

The RealtyTrac report also unveiled the results for September, and it found that there was slight relief from foreclosure filings. Last month, notices totaled 343,638, down 4% compared with August. Unfortunately, that total accounts for 87,821 homes that were repossessed by lenders.

That deluge contributed significantly to the quarter's record 237,052 repossessions, a 21% jump from the previous three months. So far this year lenders have taken back 623,852 homes.

"REO activity increased from the previous quarter in all but two states and the District of Columbia, indicating that lenders may be starting to work through some of the pent-up foreclosure inventory caused by legislative delays, loan-modification efforts and high volumes of distressed properties," James Saccacio, RealtyTrac's CEO, said in a statement.

Most disturbing is that all foreclosures -- not just repossessions -- are rampant despite efforts to corral them. Not only has the Obama administration's Making Home Affordable foreclosure prevention program taken a bite out of REOs but lenders themselves have scaled back repossessions over the past few months to give the program time to work.

And in some low-price markets, lenders simply aren't following through on foreclosures, according to Jim Rokakis, treasurer for Cuyahoga County, Ohio, which includes Cleveland.

"They'll even set the date for the sheriff's sale, but they don't file the final papers," he said. "They hold it in abeyance and let the residents stay in the house."

In ever more frequent cases, delinquent borrowers want out of the mortgage worse than the lenders. There are no firm statistics for it, but many industry watchers claim the percentage of REOs caused by borrowers voluntarily walking away from their homes is skyrocketing.

A study of the trend by the Chicago Booth School of Business and the Kellogg School of Management determined that when home price declines drop home values 10% below the mortgage balances, people start to give up their homes. When "negative equity" approaches 50%, 17% of households default, even when they can still afford their mortgage payments.
No end in sight

The foreclosure crisis may not diminish anytime soon. "The fastest growing area is in the 180 days late-plus category, the most seriously delinquent borrowers," Sharga said. "It's going to be a lingering problem."

Plus, the RealtyTrac statistics may understate the depth of the foreclosure mess because lender and government actions have delayed many filings. As a result, some delinquencies have not been counted on the foreclosure tallies. That means the crisis may not end quickly.

And because there are so many delinquent borrowers, Sharga predicts the banks will be slow to take back their properties and put the repossessed homes back on the market.

"It's hard to envision [the banks] putting millions on properties up for sale and cratering prices," he said. "Recovery will be slow and gradual. I don't see home prices getting much better until 2013."

Stay tuned,,,,for the next chapter.

DO REPUBLICANS REPRESENT THE RICHEST CONSTITUENTS? WRONG, IT'S THE DEMOCRATS THAT DO..LATEST MIS-INFORMATION




In major flip, House Dems now represent richest regions of the USA.
Democratic members of the House of Representatives now represent most of the nation's wealthiest people, a sharp turnaround from the long-standing dominance that Republicans have held over affluent districts, and were generally considered as theirs.

A USA TODAY analysis of new Census data found that Democrats represent a far different constituency today than they did in 2005, when they were the minority in the House, or in 1990, when they were the majority.

The Democratic-controlled House is now an unusual combination of the richest and poorest districts, the best and least educated, and the best and the worst insured. The analysis found that Democrats have attracted educated, affluent whites who had tended previously to vote Republican.

Democrats now represent 57% of the 4.8 million households that had incomes of $200,000 or more in 2008. In 2005, Republicans represented 55% of those affluent households.

"Democrats have made enormous gains in affluent, educated suburban districts," says Warren Glimpse, founder of Proximity, a firm that analyzes demographics. "What's not clear is whether this reflects a profound change or a temporary blip."

The Democrats' new coalition of extremes could cause friction on issues such as health care and tax policy because of Democratic proposals to raise taxes on affluent households.

"We're going to win back the hearts and minds of affluent voters when people see what the left-leaning Democrats do on health care and the economy," says Connecticut Republican Party Chairman Chris Healy. His state's three most affluent districts have flipped from Republican control to Democrats since 2006.

Ruy Teixeira of the liberal Center for American Progress disagrees: "The movement of professionals to the Democratic Party is a long-term realignment in American politics."

"The story is really education," says David Wasserman of the non-partisan Cook Political Report.He says "educated, wine-drinking Democrats" and poorer minority voters are an effective coalition because both groups are increasing in numbers. Even so, Wasserman expects Democrats to lose up to two dozen seats in the 2010 congressional elections, especially in poorer, white districts.

Democrats have virtually erased the historic wealth gap that has long defined the parties and their policies. The median household income of Democratic districts last year was just $1,180 less than in Republican districts, down from $6,793 in 1990.

Wasserman says Republicans have tended to appeal to affluent voters since the Roosevelt era in the 1930s and 1940s but recently have appealed more to Southern and rural voters, who often have lower incomes.

Key demographic findings are also interesting:

• Education Democrats represent the top 10 and bottom 10 districts ranked by the percentage of people holding advanced degrees.

• Health insurance. Democrats represent the 10 districts with the highest levels of health coverage and nine of the 10 with the lowest.

A side note is that if one looks at how the district boundaries are set, it is possible to represent the richest and poorest at the same time is the gerrymandering that goes on to draw district maps to include a large contingent of poor, running the district along one street in a bid city out to the suburbs and then absorbing a wealthy suburb which is drowned out in votes by the innner city resident who may be 80% of the vote.

That's democracy for you!

Just study the map above of Illinois First congressional district, where a former Black Panther anarchist, represents a district that snakes itself into wealthy suburbs and absorbs their vote. Also the other map shows another district (IL 11) that snakes itself to create certain political election results.

The ability to re-draw the districts after a census like the one in 2010, would allow one party to literally kick out an opponent though the re-drawing of the district's boundaries.

GOVERNMENT "ACQUISITIONS" THE VENEZUELAN WAY-IS THAT THE NEXT STEP FOR USA GOVERNMENT TAKEOVERS OF BUSINESSES; HILTON HOTEL SEIZED



Here we go again, a government takeover of...the Hilton Hotel on a resort island! No this time it is not our government, but one that we hope is not ever emulated here, that of Venezuela. President Hugo Chavez has ordered the "acquisition by force" of a landmark Hilton Hotel on Venezuela's Margarita island, the government's Official Gazette announced.

The resort, on the Caribbean resort island of Margarita in Nueva Esparta state, was targeted for state takeover less than a month after it was used to host the Africa-South America Summit. Hugo must have liked it so much, he "decided to buy it", er, steal it.

"The acquisition by force of the real estate, furnishings, and related assets (...) of the Margarita Hilton & Suites Hotel Complex, along with the adjoining Marina have been ordered," a presidential decree in the official register read.

The resolt complex includes 280 rooms, 210 suites, a casino, stores, restaurants, offices and meeting areas, as well as the adjoining marina.

The assets will be held by the state tourism corporation Venetur, which reports to the Tourism Ministry, as part of an "urgent" effort to boost "the social development side of the tourism and hotel industries in Nueva Esparta state," the Gazette said.

It is not the first time Chavez's government has checked into a Hilton and stayed for good. As the thief in chief he has already seized the Hotel Hilton in Caracas, rechristening it the Hotel Alba, a reference to the Venezuelan-led leftist regional alliance Alianza Bolivariana para las Americas (ALBA).

In the past four years, Venezuela has implemented the nationalization of industries it sees as strategic including electrical utilities, cement, steel, oil services and banking.

In spite of all the government takeovers, the country is sliding into a deepening state of "equally poor."

LOWEST TAX REVENUE IN 50 YEARS-SIGN OF THE TIMES AND DEBASING OF THE US DOLLAR IS BAD NEWS FOR THE FUTURE



President Barack Obama’s effort to lead the world economic recovery by spending the U.S. out of its recession is undermining the dollar, triggering record commodities rallies as investors scour the globe for hard assets.

As threats of a financial meltdown fade, the currency is falling victim to an unprecedented budget deficit, near-zero interest rates and slow growth. The dollar is down 10 percent against six trading partners’ legal tender in Treasury Secretary Timothy Geithner’s first eight-and-a-half months, the sharpest drop for a new occupant of that office since the Reagan administration’s James Baker persuaded world leaders to boost the deutsche mark and yen by debasing the dollar in 1985. This year’s drop followed its best two quarters in 16 years.

“The dollar had been strong because the U.S. was a haven in the storm, and now that the storm is abating, who needs the dollar?” said Edmund Phelps, who won the 2006 Nobel Prize in economics and teaches at Columbia University in New York. “People got exasperated with the tiny returns on safe assets.”

Investors are sating their renewed risk appetites with developing nations’ stocks, currencies and the commodities some of them produce. Gold is up 19 percent this year, touching an all-time high $1,062.70 an ounce on Oct. 8. Copper has rallied 103 percent with the biggest three-quarter rise in at least 21 years. Crude oil, up 64 percent, just finished its steepest eight-month climb since 1999. Aluminum has gained 24 percent, propelled by its best two quarters in a dozen years or more.

Worst Since 1991

The MSCI Emerging Markets Index yesterday reached 950.34, the highest since August 2008, after the 22-year-old gauge’s biggest seven-month rally. The Dollar Index, which measures the currency against the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, dropped to its lowest level since August 2008 on Oct. 8 after its worst two quarters since 1991.

The nonpartisan Congressional Budget Office estimates that the budget deficit for the fiscal year that ended Sept. 30, which included some of Obama’s $787 billion stimulus package and the lowest tax revenue in more than 50 years, was $1.4 trillion, more than India’s gross domestic product. The administration will announce the final figure by mid-October.

Faced with administration projections of shortfalls totaling $9.1 trillion over the next decade, Obama and Congress have pledged to restore discipline. Fed officials have discussed how -- but not when -- they plan to reduce the central bank’s balance sheet, which has doubled to $2.1 trillion under emergency lending programs to unfreeze the credit markets.

‘Lofty Assurances’

“The most important thing coming from investors in Asia, where I am, is despite all these lofty assurances by U.S. officials that there’s a credible exit strategy from both fiscal and monetary stimulus, they understandably don’t believe it,” said Stephen Roach, chairman of Morgan Stanley Asia in Hong Kong.

Geithner, 48, has adopted the past two administrations’ policy of publicly favoring a “strong dollar.” It fell 24 percent in George W. Bush’s first four-year term, which ended Jan. 20, 2005, and rose 1.3 percent in his second.

“We are going to do everything necessary to make sure we sustain confidence” in the U.S. economy, Geithner said Oct. 3 in Istanbul.

Lawrence Summers, director of the White House’s National Economic Council, echoed Geithner’s statement in an Oct. 8 interview. “He made it very clear that our commitment is to a strong dollar based on strong fundamentals,” Summers said.

U.S. Interventions

Those words may ring hollow without direct government action to support the dollar or more evidence that the fiscal and monetary stimulus will be short lived. The U.S. hasn’t moved to shore up its currency by purchasing dollars since 1995. It intervened to weaken the dollar against the yen in 1998 and to support the euro in 2000.

“Currencies that have the lack of support of petroleum, metals, and have a liberal central bank posture toward printing money are currencies that will continue to be punished,” said Peter Kenny, managing director in institutional sales at Knight Equity Markets in Jersey City, New Jersey. “The U.S. dollar is a classic example of that.”

Commodities “insist on validation and validity,” while currencies “are subject to politics and perception,” he said.

HSBC Holdings Plc economists Stephen King and Stuart Green said in a report this month that the end of U.S. economic supremacy is at hand.

Their report predicted the “demise of the West” amid “ongoing struggles in the developed world” and said that “emerging market nations are set to dominate world economic activity in the years ahead.” Titled “The Tipping Point,” the report said currencies will be weak in countries “still pondering exit strategies and faced with multiple years of debt repayment.”

Growth Prospects

“The most obvious candidates are the U.S. dollar and sterling,” they wrote. Emerging-market economies will expand 6 percent next year, more than three times the 1.8 percent growth in developed economies, they said.

China’s 9.5 percent economic growth and India’s 7.2 percent increase will lead all nations next year, the HSBC economists predicted. In contrast, GDP will expand 2.8 percent in the U.S., 1.2 percent in Japan and 0.7 percent in the 16-nation euro zone, they said.

“Asia is taking its place again on the world stage” and the wealth shift is occurring “more rapidly than anyone would have thought,” said Stephen Green, HSBC group chairman, in an Oct. 6 interview in Istanbul.

As the dollar slips, silver and gold have outperformed all major currencies since the Sept. 15, 2008, announcement of Lehman Brothers Holdings Inc.’s collapse as investors favored the metals over legal tender.

‘Sniff of Inflation’

“Gold serves as a hedge against inflation, and even though we are in the midst of a recession worldwide, the sniff of inflation is already in the air,” said Richard O’Brien, chief executive officer of Newmont Mining Corp., the largest U.S. gold producer, on Oct. 2.

The dollar is suffering even as American stocks rebound from a 13-year low reached in March. One reason: the 19 percent increase in the Standard & Poor’s 500 Index this year is trailing gains in stocks in most other nations.

Of 82 countries’ benchmark stock indexes tracked by Bloomberg, 60 performed better this year than the S&P 500 as of yesterday. Peruvian stocks lead the world with a 120 percent gain. The U.S. edged out gains by Bangladesh, New Zealand and Finland. Ghana, down 41 percent, is in last place.

Even measured against the March 9 start of the S&P 500’s biggest rally since the 1930s, the U.S. index’s 59 percent gain puts it in 39th place worldwide.

Highest Unemployment

With excess production capacity in the U.S. near an all- time high and unemployment at 9.8 percent, the highest in the Group of Seven, restoring the world’s largest economy to the 3 percent growth rate of the past two expansions may take years.

“The U.S. recovery is not yet clearly under way and other parts of the world, particularly emerging markets and commodity- based countries, are ahead of us,” said Michael Mussa, a senior fellow at the Peterson Institute in Washington and the International Monetary Fund’s former chief economist.

Niall Ferguson, a Harvard University professor, said that “it would be extraordinary” if the dollar didn’t weaken in the next year.

Obama administration officials are likely to tolerate a decline unless it “gets to an extent where it’s causing trouble,” Jim O’Neill, chief economist at Goldman Sachs Group Inc., said in an interview in Istanbul.

Excessive Drop

In an e-mail response to questions from Bloomberg News on Oct. 9, O’Neill said he considers the dollar’s recent drop excessive and predicted the currency will be stronger in a year, especially against the yen.

The dollar slumped to a postwar low of 80.63 yen in April 1995, only to rally 26 percent in the following two years. The Dollar Index reached a 10-year low in December 2004 on concern the U.S. current-account deficit was unsustainable, then rebounded 13 percent in 2006.

“We’re in the midst of a classic overshoot of the dollar,” said Michael Rosenberg, former head of foreign- exchange research at Deutsche Bank AG and a Bloomberg consultant. He said the U.S. outlook next year is more favorable than Japan and the euro area, the country’s current-account deficit is narrowing and the bond market isn’t reflecting inflation fears.

Rosenberg cited the 16 percent rise this year in the Reuters/Jefferies CRB Index of 19 commodities as evidence that the flight to raw materials isn’t widespread. Natural gas is down 49 percent and wheat has lost 31 percent.

Shorting the Dollar

The dollar is succumbing to momentum in a market that’s “lost its anchor,” Rosenberg said. “From 2001 to 2009, the best strategy was to close your eyes and short the dollar.”

The rebalancing of global wealth away from the U.S. as reflected in the dollar is likely to take years if not decades, said Carmen Reinhart, a University of Maryland economist who co- wrote a 2009 book with former IMF chief economist Kenneth Rogoff on the history of financial crises.

After World War II, the U.K. currency’s downfall was predicted “long before the sterling crisis of 1967 put the final nail in the coffin of the British pound as a reserve currency,” Reinhart said.

The dollar’s share of reserves in countries that report currency allocations fell in the second quarter to the lowest level since the euro was introduced in 1999. Reinhart predicted the dollar will remain the world’s most widely used currency for years and that any slide will be gradual until a viable alternative comes along.

“The euro hasn’t been fulfilling that role. The yen? Forget it. And the yuan is not convertible,” Reinhart said of the European, Japanese and Chinese currencies. “This is not something that’s around the corner here.”

OIL SHALE AND NATURAL GAS DEPOSITS CAN PROVIDE NEW ENERGY FOR NEXT 60 YEARS OR MORE; SIERRA CLUB EVEN BACKS THIS ENERGY ALTERNATIVE



America is not going to bleed its wealth importing fuel. Russia's grip on Europe's gas will weaken. Improvident Britain may avoid paralyzing blackouts by mid-decade after all.

The World Gas Conference in Buenos Aires last week was one of those events that shatter assumptions. Advances in technology for extracting gas from shale and methane beds have quickened dramatically, altering the global balance of energy faster than almost anybody expected.

Tony Hayward, BP's chief executive, said proven natural gas reserves around the world have risen to 1.2 trillion barrels of oil equivalent, enough for 60 years' supply – and rising fast.

"There has been a revolution in the gas fields of North America. Reserve estimates are rising sharply as technology unlocks unconventional resources," he said.

This is almost unknown to the public, despite the efforts of Nick Grealy at "No Hot Air" who has been arguing for some time that Britain's shale reserves could replace declining North Sea output.

Rune Bjornson from Norway's StatoilHydro said exploitable reserves are much greater than supposed just three years ago and may meet global gas needs for generations.

"The common wisdom was that unconventional gas was too difficult, too expensive and too demanding," he said, according to Petroleum Economist. "This has changed. If we ever doubted that gas was the fuel of the future – in many ways there's the answer."

The breakthrough has been to combine 3-D seismic imaging with new technologies to free "tight gas" by smashing rocks, known as hydro-fracturing or "fracking" in the trade.

The US is leading the charge. Operations in Pennsylvania and Texas have already been sufficient to cut US imports of liquefied natural gas (LGN) from Trinidad and Qatar to almost nil, with knock-on effects for the global gas market – and crude oil. It is one reason why spot prices for some LNG deliveries have dropped to 50pc of pipeline contracts.

Energy bulls gambling that the world economy will soon resume its bubble trajectory need to remember two facts: industrial production over the last year is still down 19pc in Japan, 18pc in Italy, 17pc in Germany, 15pc in Canada, 13pc in France and Russia. 11pc in the US and the UK and 10pc in Brazil. A 12pc rise in China does not offset this.

OPEC states are cheating on quota cuts. Non-compliance has fallen to 62pc from 82pc in March. Iran, Nigeria, Venezuela et al face a budget crunch. Why comply when non-OPEC Russia is pumping at breakneck speed?

The US Energy Department expects shale to meet half of US gas demand within 20 years, if not earlier. Projects are cranking up in eastern France and Poland. Exploration is under way in Australia, India and China.

Texas A&M University said US methods could increase global gas reserves by nine times to 16,000 TCF (trillion cubic feet). Almost a quarter is in China but it may lack the water resources to harness the technology given the depletion of the North China water basin.

Needless to say, the Kremlin is irked. "There's a lot of myths about shale production," said Gazprom's Alexander Medvedev.

If the new forecasts are accurate, Gazprom is not going to be the perennial cash cow funding Russia's great power resurgence. Russia's budget may be in structural deficit.

As for the US, we may soon be looking at an era when gas, wind and solar power, combined with a smarter grid and a switch to electric cars returns the country to near energy self-sufficiency.

This has currency implications. If you strip out the energy deficit, America's vaulting savings rate may soon bring the current account back into surplus – and that is going to come at somebody else's expense, chiefly Japan, Germany and, up to a point, China.

Shale gas is undoubtedly messy. Millions of gallons of water mixed with sand, hydrochloric acid and toxic chemicals are blasted at rocks. This is supposed to happen below the water basins but accidents have been common. Pennsylvania's eco-police have shut down a Cabot Oil & Gas operation after 8,000 gallons of chemicals spilled into a stream.

Nor is it exactly green. Natural gas has much lower CO2 emissions than coal, even from shale – which is why the Sierra Club is backing it as the lesser of evils against "clean coal" (not yet a reality). The US Federal Energy Regulatory Commission said America may not need any new coal or nuclear plants "ever" again.

I am not qualified to judge where gas excitement crosses into hyperbole. I pass on the story because the claims of BP and Statoil are so extraordinary that we may need to rewrite the geo-strategy textbooks for the next half century.

So much for fear mongers spreading the word that the world is running out of energy resources.

ELECTRIC CAR MADNESS IS REACHING SCREAM PROPORTIONS; WHEN WILL THEY UNDERSTAND THAT THE CARS ARE SIMPLY DEATH TRAPS?




Another week went by and thus it is another week of showing the new electric car designs by proud manufacturers; this time a French company which was totally ostracized in the USA for its dorky car designs and lack or reliability.

The company showed off its version of the tiny "death trap" that they see as the electric car of the future. Right, we will all rush out and spend $30,000-$40,000 on this car. That was more than the price of my first HOME!

Come on, just look at the people who are squeezed into that car!

What typical 250 pound American driver is going to fit into that car...and what about that person's spouse and the two obese kids, the family dog and the hamsters? Oh, and what about their vacation trip with the 5 suitcases?

Electric cars...the cars of the future...what a joke.

Did I mention there is insufficient electric power to suck all that overnight energy to drive 40 miles/???? What will be the price of electricity for all those electric cars. Many people have trouble now paying for their seasonal high electric bills in the summer months, and if all those electric cars start sucking off the electric grid what will be the price of electricity?

Another stupid idea....forced upon us which will cause a significant increase not only in electricity rates but also road fatalities. Nobody can survice a highway crash in that tiny death trap!

NO NEW TAXES, NO TAX INCREASES, EVERYBODY WILL BENEFIT, RIGHT? NO WAY, DUE TO INDIRECT TAXES DUE TO PRICE INCREASES FOR GOODS AND SERVICES


The decline in the dollar values is adding the worst tax of all...the loss of value of the dollar which means that all goods and services are going to be increasing.

Take a look at OIL prices, for instance. The price for a barrel of oil is climbing simply because of the lessened value of the dollar itself, caused by the ruinous policies of the government.

Thus, you can consider the increases in the price an indirect tax, and all other increases are likewise going to be an indirect tax on ALL goods whose price is going to increase due to the lessened value of the dollar.

THE DOLLAR WEAKENS AS A WORLD RESERVE CURRENCY; PREDICTIONS OF CONTINUED DECLINE BASED ON TRILLION DOLLAR DEFICITS AND WEAK ECONOMIC DATA



The "tiny dollar" may be more than just chatter as world currency reserves are quickly and quietly adding to their reserves not dollars, but other currencies. This is the start of a trend that is NOT likely to be reversed.

Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.

Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.

World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.

“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.”

The dollar’s 37 percent share of new reserves fell from about a 63 percent average since 1999. Englander concluded in a report that the trend “accelerated” in the third quarter. He said in an interview that “for the next couple of months, the forces are still in place” for continued diversification.

America’s currency has been under siege as the Treasury sells a record amount of debt to finance a budget deficit that totaled $1.4 trillion in fiscal 2009 ended Sept. 30.

Intercontinental Exchange Inc.’s Dollar Index, which tracks the currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, fell to 75.77 last week, the lowest level since August 2008 and down from the high this year of 89.624 on March 4. The index, at 76.104 today, is within six points of its record low reached in March 2008.

Foreign companies and officials are starting to say their economies are getting hurt because of the dollar’s weakness.

Yukitoshi Funo, executive vice president of Toyota City, Japan-based Toyota Motor Corp., the nation’s biggest automaker, called the yen’s strength “painful.” Fabrice Bregier, chief operating officer of Toulouse, France-based Airbus SAS, the world’s largest commercial planemaker, said on Oct. 8 the euro’s 11 percent rise since April was “challenging.”

The economies of both Japan and Europe depend on exports that get more expensive whenever the greenback slumps. European Central Bank President Jean-Claude Trichet said in Venice on Oct. 8 that U.S. policy makers’ preference for a strong dollar is “extremely important in the present circumstances.”

“Major reserve-currency issuing countries should take into account and balance the implications of their monetary policies for both their own economies and the world economy with a view to upholding stability of international financial markets,” China President Hu Jintao told the Group of 20 leaders in Pittsburgh on Sept. 25, according to an English translation of his prepared remarks. China is America’s largest creditor.

Developing countries have likely sold about $30 billion for euros, yen and other currencies each month since March, according to strategists at Bank of America-Merrill Lynch.

That helped reduce the dollar’s weight at central banks that report currency holdings to 62.8 percent as of June 30, the lowest on record, the latest International Monetary Fund data show. The quarter’s 2.2 percentage point decline was the biggest since falling 2.5 percentage points to 69.1 percent in the period ended June 30, 2002.

“The diversification out of the dollar will accelerate,” said Fabrizio Fiorini, a money manager who helps oversee $12 billion at Aletti Gestielle SGR SpA in Milan. “People are buying the euro not because they want that currency, but because they want to get rid of the dollar. In the long run, the U.S. will not be the same powerful country that it once was.”

Central banks’ moves away from the dollar are a temporary trend that will reverse once the Fed starts raising interest rates from near zero, according to Christoph Kind, who helps manage $20 billion as head of asset allocation at Frankfurt Trust in Germany.

“The world is currently flush with the U.S. dollar, which is available at no cost,” Kind said. “If there’s a turnaround in U.S. monetary policy, there will be a change of perception about the dollar as a reserve currency. The diversification has more to do with reduction of concentration risks rather than a dim view of the U.S. or its currency.”

The median forecast in a Bloomberg survey of 54 economists is for the Fed to lift its target rate for overnight loans between banks to 1.25 percent by the end of 2010. The European Central Bank will boost its benchmark a half percentage point to 1.5 percent, a separate poll shows.

America’s economy will grow 2.4 percent in 2010, compared with 0.95 percent in the euro-zone, and 1 percent in Japan, median predictions show. Japan is seen keeping its rate at 0.1 percent through 2010.

Central bank diversification is helping push the relative worth of the euro and the yen above what differences in interest rates, cost of living and other data indicate they should be. The euro is 16 percent more expensive than its fair value of $1.22, according to economic models used by Credit Suisse Group AG. Morgan Stanley says the yen is 10 percent overvalued.

Sentiment toward the dollar reminds John Taylor, chairman of New York-based FX Concepts Inc., the world’s largest currency hedge fund, of the mid-1990s. That’s when the greenback tumbled to a post-World War II low of 79.75 against the yen on April 19, 1995, on concern that the Fed wasn’t raising rates fast enough to contain inflation. Like now, speculation about central bank diversification and the demise of the dollar’s primacy rose.

The currency then gained 26 percent versus the yen and 25 percent against the deutsche mark in the following two years as technology innovation increased U.S. productivity and attracted foreign capital.

“People didn’t like the dollar in 1995,” said Taylor, whose firm has $9 billion under management. “That was very stupid and turned out to be wrong. Now, we are getting to the point that people’s attitude toward the dollar becomes ridiculously negative.”

The median estimate of more than 40 economists and strategists is for the dollar to end the year little changed at $1.47 per euro, and appreciate to 92 yen, from 89.97 today.

Englander at London-based Barclays, the world’s third- largest foreign-exchange trader, predicts the U.S. currency will weaken 3.3 percent against the euro to $1.52 in three months. He advised in March, when the dollar peaked this year, to sell the currency. Standard Chartered, the most accurate dollar-euro forecaster in Bloomberg surveys for the six quarters that ended June 30, sees the greenback declining to $1.55 by year-end.

The dollar’s reduced share of new reserves is also a reflection of U.S. assets’ lagging performance as the country struggles to recover from the worst recession since World War II.

Since Jan. 1, 61 of 82 country equity indexes tracked by Bloomberg have outperformed the Standard & Poor’s 500 Index of U.S. stocks, which has gained 18.6 percent. That compares with 70.6 percent for Brazil’s Bovespa Stock Index and 49.4 percent for Hong Kong’s Hang Seng Index.

Treasuries have lost 2.4 percent, after reinvested interest, versus a return of 27.4 percent in emerging economies’ dollar- denominated bonds, Merrill Lynch & Co. indexes show.

The growth of global reserves is accelerating, with Taiwan’s and South Korea’s, the fifth- and sixth-largest in the world, rising 2.1 percent to $332.2 billion and 3.6 percent to $254.3 billion in September, the fastest since May. The four biggest pools of reserves are held by China, Japan, Russia and India.

China, which controlled $2.1 trillion in foreign reserves as of June 30 and owns $800 billion of U.S. debt, is among the countries that don’t report allocations.

“Unless you think China does things significantly differently from others,” the anti-dollar trend is unmistakable, Englander said.

Englander’s conclusions are based on IMF data from central banks that report their currency allocations, which account for 63 percent of total global reserves. Barclays adjusted the IMF data for changes in exchange rates after the reserves were amassed to get an accurate snapshot of allocations at the time they were acquired.

Investors can make money by following central banks’ moves, according to Barclays, which created a trading model that flashes signals to buy or sell the dollar based on global reserve shifts and other variables. Each trade triggered by the system has average returns of more than 1 percent.

Bill Gross, who runs the $186 billion Pimco Total Return Fund, the world’s largest bond fund, said in June that dollar investors should diversify before central banks do the same on concern that the U.S.’s budget deficit will deepen.

“The world is changing, and the dollar is losing its status,” said Aletti Gestielle’s Fiorini. “If you have a 5- year or 10-year view about the dollar, it should be for a weaker currency.”

That estimate is simply due to current dollar woes. If our nation continues the forecasted trillion dollar deficits, this view will become a reality much faster since nobody will be wanting to hold a weak currency that is decling in value on a forecasted and predictable schedule.

THE NEW 2012 CHEVY "DEATH TRAP"-A GOVERNMENT INSPIRED CAR THAT IS TOO SMALL AND TOO DANGEROUS PLANNED FOR INSTANT FAILURE



After revealing an eye-popping projected fuel economy figure for the Chevrolet Volt, General Motors took visiting journalists on a behind-the scenes tour of the carmaker's design studios for a look at its future product line-up.

There was just one rule: No photos could be taken. So the photos you see here are of upcoming products -- or ones just hitting showrooms now -- that have already been seen publicly.

The Volt is obviously the biggest news coming from Chevrolet, but an upcoming redesign of the popular Malibu will make plenty of news of its own. The current Malibu, named "Car of the Year" in 2008, has become an icon of GM's product turnaround.

Finally, here was a GM car with the performance, fuel economy and style to rival the Honda Accord and Toyota Camry.

The new Malibu will still be recognizable as the same car, but with sharper, more flowing lines. The back end of the car, in particular, is very different. The rear view on today's Malibu is bland, but the new version gets a BMW-like raised trunk lid with taillights that jut out at the corners.

"Our job is to make these vehicles look like $40,000 or $50,000 vehicles even though they're priced like Chevrolets," GM designer David Lyon said.

The trunk was designed to be bigger and easier to access in answer to customer complaints about the current car, a GM designer said. The car is almost imperceptibly larger, too, especially on the inside.

A Camaro convertible was also on display as proof that, yes, GM really is working on it.

A new Chevrolet Aveo small car was also on display right next to the sightly Spark subcompact. The new Aveo will look very much like a big brother to the Spark. Both, for instance, will have hidden rear door handles giving them a 2-door look.

In the next few years as we seek to collect back the "loans" to this company, it will be hard to imagine that PLUS SIZED Americans will be lining up to squeeze into these tiny death traps-cars that are likely not to protect their occupants in the event of a high speed crash...especially a crash with a large SUV or truck.

The government mandates to build small cars are absolutely going against the free market forces that dictate a need to comfortable larger cars...they can have smaller engines...but why would anyone in the car business think about that?
 
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